EUR/USD: French vote on Monday – OCBC

Euro (EUR) remains largely supported amid the mild pullback in US Dollar (USD). Pair was last at 1.1687, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Indicators are not showing a clear bias

"Focus is on French politics in the near term. Prediction market is looking for 97% chance that the confidence vote on 8 Sep fails and PM Bayrou will be out as French PM by 31 December. Recall last year, a no-confidence vote gamble (although not on budget) saw the exit of former PM Barnier. The risk of a French government fallout and without a leader for weeks or even months should not be ruled out."

"To add, Dutch holds General Elections on 29 October. These political noises may have short term bearish implication on EUR. Nevertheless, broader fundamentals should still support EUR, on a buy on dips."

"Daily momentum and RSI indicators are not showing a clear bias. 2-way trades still likely. Resistance here at 1.1670 levels (21, 50 DMAs), 1.1750, 1.1830 levels (2025 high). Support at 1.1620, 1.1570 (23.6% fibo retracement of Mar low to Jul high). But today, US payrolls can influence USD/ FX if there is any major surprises either side to the data".